Michigan Bill Seeks to Exempt Broadband Grants From State Taxes

March 31, 2025 — A new bill introduced in the Michigan House would exempt broadband grants from state taxation in an effort to accelerate high-speed internet expansion, particularly in rural areas.

House Bill 4237, sponsored by Republican Rep. Karl Bohnak, would make state and federal broadband grant funds tax-exempt. The proposal aims to maximize the impact of broadband funding by ensuring providers can use the full value of their grants for infrastructure projects.

“State government must do its part to help expand connectivity,” Bohnak said. “The Michigan Broadband Accessibility Act will remove a paywall blocking progress, allowing for greater public and private investments in broadband infrastructure.”

Rural regions, especially in Michigan’s Upper Peninsula, face significant connectivity challenges. Recent reports show that in some U.P. counties, fewer than 50% of homes have reliable internet access. Even in more connected areas like Dickinson and Marquette counties, access rates remain below the national average of 90%.

Michigan is scheduled to receive about $1.6 billion from the Broadband Equity, Access, and Deployment Program, but under current state tax law, these grants are considered taxable income. 

Bohnak’s bill would change that, aligning Michigan with federal legislation introduced by Sens. Jerry Moran, R-Kan., and Mark Warner, D-Va., which would exempt broadband grants from federal taxation.

The bill has bipartisan support. A similar measure passed the Michigan House last year with broad approval but did not advance in the Senate.